Nigeria’s business activity hits 13-month high in January

Business activity in Nigeria rose to the highest in 13 months in January 2024, a new Purchasing Managers’ Index (PMI) has shown

The latest monthly PMI by Stanbic IBTC Bank released on Thursday showed the headline index rose to 54.5 in January from 52.7 in December. Readings above 50.0 signal an improvement in business conditions, while those below show deterioration.

The reading also shows that the index expanded for the second time since November.

“The recovery in the Nigerian private sector gathered momentum at the start of 2024, with rates of expansion in output and new orders accelerating sharply,” the report said.

It said purchasing activity also expanded markedly, but difficulties paying staff meant that the rate of job creation eased, contributing to a rise in backlogs of work.

“Meanwhile, rates of inflation remained elevated but softened from December. In fact, the strengthening of business conditions was the most pronounced in just over a year.”

The PMI index, which measures the performance of the private sector, is derived from a survey of 400 companies from agriculture, manufacturing, services, construction and retail sectors.

It is a composite index based on five individual indexes with the following weights: new orders (30 percent), output (25 percent), employment (20 percent), suppliers’ delivery times (15 percent) and stock of items purchased (10 percent), with the delivery times index inverted so that it moves in a comparable direction.

The recovery in new orders which began in December gathered momentum in January amid reports from panellists of strengthening demand, according to the PMI report.

“New business increased sharply, and to the largest degree since April 2022. Business activity also rose for the second successive month in January and at the fastest pace in 21 months. All four broad sectors covered by the survey posted improvements in output,” it said.

Details later…